Chart Busters: Top trading set-ups to watch out for Friday

On Thursday, the Nifty index opened with a downside gap. After registering the low of 16866.75 level the index recovered 243.40 points. The price action has formed a bullish pin bar candlestick pattern. The daily stochastic has given bullish crossover, which suggests a limited downside. Going ahead, the zone of 16836.80-16866.75 will act as strong support for the index.

Here are the top trading set-ups to watch out for Friday.

PSP Projects: Considering the daily chart, the stock has given a breakout of downward sloping trendline resistance. Further, this breakout was supported by a robust volume of more than 14 times of 50-days average volume, indicating strong buying interest by market participants. The 50-days average volume was 1.63 lakh while on Thursday the stock has registered a total volume of 23.04 lakh. In addition, it has formed a sizeable bullish candle on breakout day.

As the stock is trading at a 52-week high, it is trading above its short and long-term moving averages. These averages are in a rising trajectory. Interestingly, the leading indicator, 14-period daily RSI has also given trendline breakout. The weekly RSI is also in a bullish trajectory. The daily MACD stays bullish as it is trading above its zero line and signal line. The ADX is reasonably good at 22.86 levels. The +DI is above the -DI and ADX shows strength in the trend.

Technically, all the factors are currently aligned in support of the bulls. Hence, we would advise the traders to be with a bullish bias. On the downside, the 20-day EMA will act as strong support.

Au Small Finance Bank: The stock has formed a long-legged doji candlestick pattern as of December 27, 2021, and thereafter witnessed a 31% upside in 13 trading sessions. After registering the high of Rs 1319.70, the stock witnessed a minor throwback. During this throwback phase, the volume was mostly below the 50-day average volume, which suggests its routine decline after a robust move.

The correction is arrested near the 23.6% Fibonacci retracement level of its prior upward move (Rs 925- Rs 1319.70) and it coincides with short term 20-day EMA level. On Thursday, the stock has taken support and bounced back. The reversal from the support is further justified by above 50-days average volume.

The momentum indicators and oscillators are also supporting the overall bullish price action, while the leading indicator, 14-period daily RSI has given bullish crossover and is in rising mode. The weekly RSI is about to cross the 60 mark., whereas the stochastic has also given bullish crossover.

Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 1320 followed by Rs 1390 in the short term. On the downside, the 20-day EMA will act as strong support for the stock.